Asean member states must agree on a business model for the Asean Power Grid (APG) in order to secure investments for its development, said Malaysia’s deputy prime minister Fadillah Yusof.
So far, financial institutions such as the World Bank, Asian Development Bank and even American firms have shown interest in financing the APG, he told reporters at the Unlocking capital for sustainability forum in Kuala Lumpur yesterday.
“But for now, what we have to focus on is standardisation and a business model that has to be agreed upon,” said Fadillah, who is also Malaysia’s energy transition and water transformation minister.
Malaysia deputy prime minister Fadillah Yusof speaking to members of the press on the sidelines of the Unlocking capital for sustainability Malaysia forum. Image: Jason Tan / Eco-Business
Asean’s energy ministers will be meeting in Malaysia this October to finalise a roadmap for the APG’s development. This will include harmonising regulatory frameworks and financing models to reduce investment barriers, Fadillah said.
“We are on track to table progressive outcomes in October 2025, marking a critical milestone in regional power system integration,” he added in his keynote speech.
As this year’s Asean chair, Malaysia has been eager to make progress on the APG, which experts have said is critical to decarbonise the region’s energy sector by boosting cross-border electricity interconnections.
“Global headwinds ranging from geopolitical tensions and volatile economic trade dynamics has put us at risk of vital capital being diverted away from emerging economies like ours – at a time when investments are urgently needed for these vital climate actions towards net zero,” Fadillah said.
He called on all Asean member states to work closely together to enable a just, inclusive and resilient energy transition, as it is not just an environmental need but a strategic opportunity to deepen regional cooperation.
Fadillah added that Malaysia sees the APG as vital to promoting collective energy resilience by expanding energy trade, reducing fossil fuel dependence and boosting regional energy security.
“It is also a compelling investment platform for institutional and private investors seeking long-term, climate-aligned imperatives,” he said.
However, transmission systems will need to be upgraded to support multi-directional power flows and greater flows of renewable energy, Fadillah added.
Malaysia’s wheeling charges under review
Malaysia sought to boost the share of renewables in its energy mix by enabling third-party access to the grid starting September 2024. The Corporate Renewable Energy Supply Scheme (CRESS) allows corporate consumers to buy renewable energy directly from producers.
So far, the scheme has attracted several corporate players, including Singapore-based DayOne Data Centres. It was the first to announce its participation, having signed a bilateral energy supply contract with Malaysian grid operator Tenaga Nasional last month to feed 500 megawatts of clean energy to its hyperscale data centres in Johor.
However, participants under the CRESS scheme are subject to wheeling charges paid to Tenaga Nasional, which are akin to a toll fee for use of the national grid to transmit electricity. They are set at 45 sen per kilowatt-hour (kWh) (US$0.11/kWh) for intermittent sources of energy such as solar and 25 sen/kWh (US$0.06/kWh) for consistent renewable energy sources which use battery storage systems – which industry players have said are too high.
Fadillah said that the ministry is aware of the industry’s concerns and is currently getting input from all industry players, from large multinationals to small and medium-sized companies. It intends to make an annoucement on the rates before the end of the year.
“We are reviewing to what extent we can accommodate and facilitate [the renewable energy trade] between power generators and end users,” he said.
In his address, Fadillah said delivering on Malaysia’s National Energy Transition Roadmap (NETR), which aims for a 70 per cent renewble energy mix by 2050, will “require more than policy directions”, but also “demands a fundamental transformation of the energy ecosystem”. He highlighted the need for systemic investments in smart grids, advanced energy storage, and cross-border infrastructure to support decentralised, secure energy systems.
Acknowledging that the energy transition will reshape employment, he called for a just and inclusive approach supported by “comprehensive reskilling, upskilling, and social protection mechanisms in empowering our workforce and catalysing new green industries”.
This call was echoed by the Securities Commission Malaysia (SC), whose chairman Mohammad Faiz Azmi emphasised the need for Malaysia’s capital market and all market players to embed sustainability considerations into the products and services they offer.
The SC’s upcoming Capital Market Masterplan 4 will integrate the NETR and other national priorities, Mohammad Faiz said. It is also working to boost financing towards climate adaptation in the region as it chairs the Asean Capital Markets Forum this year, adding a guide on adaptation and mitigation to the Asean Taxonomy.
The guide will provide a much-needed framework for identifying adaptation projects and financing options in the region as well as prioritise key focus areas for adaptation, he said.
Themed on fostering inclusive and sustainable growth for Asean, the Malaysia edition of Eco-Business’s Unlocking capital for sustainability forum on Monday saw more than 200 representatives from government, business and finance sectors and civil society convening to discuss actions for achieving the region’s vision of creating a more resilient future.
Follow our coverage on Eco-Business’ flagship sustainable finance and business forum Unlocking capital for sustainability here.
